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Telecommuting and Unemployment
Maxine worked in New York for a financial
information services provider. When she moved to Florida,
her employer agreed
to allow her to telecommute. Maxine was responsible for
the same tasks that she had handled in New York, only now
from her laptop in Florida she logged onto her employer's
mainframe computer each workday.
Two years into the telecommuting arrangement, Maxine's company
decided to end it. When she turned down an offer to return
to New York, Maxine was without a job. She was denied unemployment
benefits in Florida following a ruling that she had voluntarily
quit her job without good cause. However, the Florida agency
advised Maxine that she might be eligible to receive unemployment
benefits in New York.
In what may be the first court decision
of its kind on interstate telecommuters, New York's highest
court also ruled that Maxine
was ineligible for benefits, but for a different reason.
Under New York law, a threshold requirement for eligibility
is that the employee's entire service for the employer, except
for incidental work, must be "localized" in New
York. Maxine argued unsuccessfully that her services were
localized in New York, at her employer's mainframe computer,
notwithstanding that she initiated this service on her laptop
in Florida. The court ruled instead that the physical presence
of the employee determines in which state a telecommuter
is located. For work done while she was located in Florida,
Maxine was not eligible for unemployment compensation in
New York.
When the new economy met the old unemployment insurance
system in Maxine's case, the court stayed with principles
that predate the age of computers. The outcome was dictated
by two rules that are uniformly recognized: All of an individual's
employment should be allocated to one state, which should
be solely responsible for paying benefits; and that state
should be the one in which it is most likely that the individual
will become unemployed and seek work.
Unemployment has the greatest economic impact on the community
in which the unemployed individual resides, and benefits
generally are linked to that area's cost of living. Legislators
and judges from previous generations could not have foreseen
today's world of interstate telecommuting, but the rules
they created are still valid. For better or worse, Maxine
was tied to Florida, where she was physically present, and
she could not look to New York for unemployment benefits. |
